WEF says boards have a ‘key role’ in protecting nature
WEF adds that the natural world has suffered from a string of “poor business decisions”
The World Economic Forum has issued a stark warning about businesses’ impact on nature, just as the global lobbying body’s latest annual summit kicks off in Davos, Switzerland.
In a white paper tailored exclusively to boards, the WEF has said that nature needs a central place in business strategies, and directors are crucial to this process.
If they fail, they risk everything from supply chain crises to unmanageable costs, the document said.
What’s going on?
“Poor business decisions” have damaged the natural world, and if they continue, things will only get worse, the WEF white paper warned.
But business leaders, particularly board and their chairs, were instrumental in reversing this trend, it added.
“Board members have a key role to play when it comes to valuing and protecting nature as a core business purpose,” the organisation tweeted last week on release of the 31-page document.
It stressed that the key to turning ideals into action was a close look at business strategies and how they can better reflect environmental concerns.
What does the WEF want board members to do?
In a nutshell: take the lead.
If you’ve been in corporate governance long, you’ll probably know the depth of influence the board has on strategy. Strategy is what the WEF care about most of all, so they’re calling on boards to use their influence.
“Chairpersons need to guide the conversation to ensure that board members understand the risks and opportunities to successfully – and responsibly – steward the business through the transition.”
Although it will likely differ for each company, this transition will likely involve revamped reporting protocols, bigger and more quantifiable goals, and increased shareholder pressure.
And if they don’t do it?
The stakes are high, the WEF says:
- Natural resource depletion may lead to reduced revenue.
- Negative health impacts may lead to workforce depletion.
- Insurance costs may rise unmanageably.
- Climate goals may never be reached, causing businesses even more headaches.
“Businesses must act diligently in mainstreaming the integration of nature within their business strategy, investment decisions and operations,” said the executive secretary of the Convention on Biological Diversity, Elizabeth Mrema.
What does the rest of the document detail?
It’s a broad collection of arguments and how-to’s intended to make nature relevant again.
Opening with the critique that the natural world is still largely ignored by businesses, the document tries to explain why it’s important to protect and – if that doesn’t convince readers – how businesses can “unlock its hidden value”.
In between, it discusses the emerging risks to the natural world and what actions boards can pursue to mitigate them.
And the actions are?
You’ll need to read the full report to get the best insight, but in summary, the actions constitute a five-point plan for boards to follow:
- Understanding the importance of nature, both now and to future generations.
- Determining what impact their business has on nature.
- Identifying risks and opportunities while beginning a thorough disclosure process.
- Forming a list of next steps in making the business nature-friendly and successful.
- Give clear updates to all stakeholders on the firm’s relationship with and impact on nature.
Are these steps worth following?
Without getting too bogged down in the debate over the corporate-environment relationship, it seems that, yes, the steps are worth following.
Protecting nature ties closely to the ESG (environmental, social and governance) movement, and all the commentary suggests it will continue to gain strength.
ESG matters to investors. Outlets such as Forbes and Insider Intelligence acknowledge this and encourage firms to make it central to their corporate strategy.
Anything that stands a chance of helping with this – such as this WEF guide – is worth a look.